The New York Public Service Commission approved a 2.8% annual base rate increase ($21 million) for National Fuel Gas Distribution Corp. effective Aug. 1, but National Fuel said its customers rates will actually decline 2% ($15 million) because of bill credits and tax revenue reductions.
For the typical residential customer, the decrease would amount to about 1.5%, or $20/year for the two-year term of the plan, the utility said. This is National Fuel's first increase in delivery service charges since 1998. Commodity prices, however, have been rising sharply so customers have been paying more for their gas.
National Fuel said a base revenue increase of $21 million will be achieved through the elimination of a current bill credit ($4.5 million), the elimination of the now-defunct Home Insulation and Energy Conservation Act (HIECA) credit ($1.3 million), and a base rate increase that accounts for the balance ($15.2 million).
Offsetting the increase is the refund to customers of $32.5 million in previously collected charges to recover the State Income Taxes obligations of the utility. The refund would be distributed to customers through two annual $16.25 million credits. Beginning in 2000, on the approval of the State Legislature and the PSC, utilities in New York State began transitioning from the state's Gross Receipts Tax model to the State Income Tax mechanism.
The rate plan is in response to a number of events that have occurred. Since 1990, the utility's employment levels have dropped by 45%. The rate plan also provides for programs designed to lend additional support to low-income customers and to provide safe delivery service to its 500,000 customers in New York.
The utility's parent company, National Fuel Gas Co., also announced Thursday that subsidiary Horizon Energy Development BV completed the previously announced sale of its entire interest in United Energy, a district heating and electric generation business in the Bohemia region of the Czech Republic. Horizon received US$116.3 million in exchange for the entire block of shares that it owned in United Energy (85.16% of the total outstanding shares). The transaction is expected to result in a non-recurring gain of US$25 million, or $0.30 per diluted share, in the fourth quarter, National Fuel said.
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